International Emission Permit Markets with Refunding

Hans Gersbach and Ralph Winkler

No 7035, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We propose a blueprint for an international emission permit market such as the EU trading scheme. Each country decides on the amount of permits it wants to offer. A fraction of these permits is grandfathered, the remainder is auctioned. Revenues from the auction are collected in a global fund and reimbursed to member countries in fixed proportions. We show that international permit markets with refunding lead to outcomes in which all countries tighten the issuance of permits and are better off compared to standard international permit markets. If the share of grandfathered permits is sufficiently small, we obtain approximately socially optimal emission reductions.

Keywords: Climate change mitigation; Global refunding scheme; International agreements; International permit markets; Tradeable permits (search for similar items in EconPapers)
JEL-codes: H23 H41 Q54 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: International emission permit markets with refunding (2011)
Working Paper: International Emission Permit Markets with Refunding (2008)
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